Ethereum ETF from Grayscale sees almost $2 billion in outflows post-launch

Investors have withdrawn nearly $2 billion from Grayscale’s Ethereum exchange-traded fund (ETF) since its conversion from a trust, as reported by data from Farside Investors. The fund, known by the ETHE ticker, experienced a decrease in market value to $6.7 billion due to the decline in Ether’s price.

On a single day, Wednesday, Grayscale’s ETHE saw a loss of $133 million, a significant amount but not its largest outflow to date. The most substantial outflow occurred on the ETF’s debut day, with investors pulling out $484 million.

In contrast, the Grayscale Ethereum Mini Trust (ETH), which offers lower fees, continued to attract investments, with over $200 million in total net inflows. The fund received $19.5 million on Wednesday, marking its seventh consecutive day of inflows.

While ETHE charges a 2.5% annual management fee, ETH boasts a much lower fee of 0.15%, making it the most cost-effective spot Ethereum ETF available. Grayscale’s decision to introduce the Ethereum Mini Trust early seems to have been a strategic move, following its experience with the Bitcoin Trust (GBTC).

Competing Ethereum ETFs from BlackRock, Fidelity, VanEck, Bitwise, and 21Shares collectively gained over $36 million on Wednesday. However, the group of US spot Ethereum ETFs experienced approximately $77 million in outflows, reversing the positive trend observed the previous day.

In a separate development, the Grayscale Bitcoin Mini Trust (BTC), a derivative of GBTC, commenced trading after receiving regulatory approval earlier this month. On its first day, the ETF attracted $18 million in investments, while GBTC reported no flows, according to Farside Investors’ data.

Grayscale’s BTC offers the lowest management fee among ETFs providing direct exposure to Ether, standing at 0.15%. With this new offering, the asset manager aims to reallocate 10% of Bitcoin from its existing Bitcoin Trust to the new mini version, creating a more cost-effective option for Bitcoin ETF investors and potentially alleviating selling pressure on GBTC.

The introduction of the mini fund is expected to capture a portion of capital outflows from GBTC and potentially mitigate the selling pressure on the existing trust.